How can I renovate during a recession?

In recent years, many homeowners purchased what was supposed to be their starter home. They intended to stay for a while, allowing it to appreciate in value, and eventually sell it for a profit to upgrade to their 'forever' home. Some made a few improvements to increase its value, while others left it unchanged. However, the real estate crash of 2007-2008 left many homeowners stranded. Suddenly, selling for a large profit to the highest bidder became impossible.

During the boom years, contractors and builders were busy with new construction projects. When the market slowed, however, demand dwindled, home loans became scarce, and builders were left with an excess of vacant properties. According to the Joint Center for Housing Studies at Harvard University, home improvement spending peaked in 2006 but steadily declined each quarter afterward. The center estimates that by the third quarter of 2009, home renovation spending would experience a 12.1 percent annual drop [source: Harvard].

As a result of the housing crisis, people are staying in their homes longer. With contractors out of work and material costs dropping, a recession can be an ideal time to renovate your starter home—provided the project adds substantial value with minimal investment. Tackling a few home improvement projects allows you to enjoy your space more while waiting for the market to recover, adding value to your home in the process.

Why Renovate in a Recession?

When budgets are tight, expenses for travel and leisure are usually the first to be cut. This has led to a rise in a new type of vacation: the staycation. Instead of heading to a beach rental, you take time off work and vacation at home. It's the perfect time to enhance your largest asset—your house. Not only will this provide enjoyment for your family, but it will also increase your home's value when it comes time to sell.

Another advantage of renovating during a recession is the availability of quality contractors. During the housing boom, the contractor you wanted might have had a long wait list. But in 2008, with a significant drop in new construction, contractors became much more accessible. Moreover, as the market slowed, poor contractors were filtered out, increasing the likelihood of hiring a skilled crew. With supply exceeding demand, sought-after contractors offer more competitive prices to stay busy and keep their teams working.

Taking the do-it-yourself (DIY) approach is a fantastic option during a recession. Labor costs are a significant part of a contractor’s budget, so if you take on projects yourself, you can save a considerable amount. Additionally, building materials are often discounted during a recession, giving DIYers even more savings. Keep an eye out for sales at your local hardware store to maximize savings.

Affordable Renovations

Painting is the most affordable way to make a noticeable difference in a room. A gallon of paint costs less than a dinner out and lasts much longer. A fresh coat of a calming blue in your living room can instantly change the entire atmosphere of the space. Be sure to choose colors for each room that harmonize with your home's overall style.

If a major landscaping overhaul isn't in the budget, planting flowers is an excellent and affordable way to brighten up the exterior of your home. Small packs of annuals early in the season are much cheaper than fully grown plants. Bulbs are also inexpensive, low-maintenance, and often come back year after year with vibrant colors. For an even more budget-friendly approach, you can start seeds early and transplant them once the weather warms up.

Bathroom remodels are in high demand right now, as they are one of the key features that buyers look for when purchasing a home. If your bathroom is outdated, there are several cost-effective upgrades you can make to modernize it. Updating your tiles is an affordable option, and it's a project that even a beginner renovator can successfully complete. While new vanities can be pricey, consider repurposing an old nightstand or dresser by adding a sink. This personalized touch is both appealing to buyers and budget-friendly.

Kitchens are another major selling point for buyers. Replacing cabinets can be a huge expense, but refacing or painting them is a great way to refresh your kitchen without spending too much. If you're looking to replace your cabinets, open shelving is a trendy and cost-effective alternative that’s gaining popularity in design magazines. Changing the hardware and drawer pulls is another simple yet impactful way to give your kitchen a makeover. While granite countertops are highly sought after, they can be expensive, but installing granite tiles with matching grout offers a similar look at a fraction of the cost.

Finding Great Renovation Deals

To achieve a successful renovation, the goal is to get the most return on your investment for the least amount of money. Fortunately, there are plenty of opportunities to score great deals, even during tough economic times—you just need to know where to look. Many towns and cities have home supply liquidation stores that sell overstocked or lightly used items at significantly discounted prices. You can find windows, doors, molding, drywall, vanities, and even kitchen islands at a fraction of what you'd pay at a large retail store.

Having the right tools for the job is crucial. You don’t want to use a handsaw for a task that requires a circular saw. If you don't own the necessary tools, many hardware stores offer tool rentals and can provide guidance on how to use them. If you’re planning to take on more home projects, it might be worth investing in essential tools, but for specialized tasks, renting the proper tools is usually the best option.

Visit your local big-box retailer for free workshops on home renovation. They offer classes on everything from tiling and installing wood floors to hanging drywall and building a fence. Additionally, numerous TV shows are dedicated to DIY enthusiasts, providing tips and step-by-step instructions for the ambitious homeowner.

You can also save a lot of money by buying secondhand. Check out salvage yards, flea markets, and garage sales—everything is fair game as long as it’s something you need and it’s affordable. Occasionally, other DIY-ers will leave perfectly usable materials on the curb, so be on the lookout in your neighborhood for items like an old nine-panel interior door that could be perfect for your home office.

The internet is another fantastic tool for finding great deals on used materials. Websites like eBay, Craigslist, and Freecycle are your go-to resources. You can also use Craigslist to find affordable handymen, plumbers, or electricians. Just be sure to check that they are licensed and ask for references before hiring; remember, you typically get what you pay for, and hiring an unqualified worker could cost you more in the long run. If a worker refuses to provide references or a written estimate, move on and find someone else.

If you’re ready to start upgrading your home, check out the links on the next page for more resources to assist with your project.